Biohaven .(BHVN) - 2024 Q2 - Quarterly Report

Part I Financial Information This section covers Biohaven Ltd.'s unaudited condensed consolidated financial statements and management's analysis of financial condition and operations Item 1: Condensed Consolidated Financial Statements (Unaudited) This section presents Biohaven Ltd.'s unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes Condensed Consolidated Balance Sheets This section provides a snapshot of Biohaven's financial position, detailing assets, liabilities, and shareholders' equity at specific dates | Metric | June 30, 2024 (Unaudited) ($ thousands) | December 31, 2023 ($ thousands) | | :-------------------------- | :-------------------------------------- | :------------------------------ | | Assets | | | | Total current assets | 511,268 | 442,446 | | Total assets | 582,641 | 513,212 | | Liabilities | | | | Total current liabilities | 156,207 | 55,423 | | Total liabilities | 198,901 | 85,237 | | Shareholders' Equity | | | | Total shareholders' equity | 383,740 | 427,975 | - Total assets increased by $69,400 thousand from December 31, 2023, to June 30, 2024, primarily driven by an increase in marketable securities and prepaid expenses[6] - Total liabilities significantly increased by $113,700 thousand, mainly due to new forward contract and derivative liabilities[6] - Total shareholders' equity decreased by $44,200 thousand[6] Condensed Consolidated Statements of Operations and Comprehensive Loss This section details Biohaven's financial performance, presenting revenues, expenses, and net loss for the periods ended June 30, 2024 and 2023 | Metric | Three Months Ended June 30, 2024 ($ thousands) | Three Months Ended June 30, 2023 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Research and development | 314,819 | 79,490 | 470,791 | 142,951 | | General and administrative | 18,953 | 14,521 | 46,221 | 28,842 | | Total operating expenses | 333,772 | 94,011 | 517,012 | 171,793 | | Loss from operations | (333,772) | (94,011) | (517,012) | (171,793) | | Other income, net | 14,178 | 5,842 | 18,483 | 14,071 | | Net loss | (319,771) | (90,346) | (499,275) | (160,838) | | Net loss per share — basic and diluted | (3.64) | (1.32) | (5.93) | (2.36) | - Net loss significantly increased for both the three and six months ended June 30, 2024, primarily due to a substantial rise in research and development expenses, which included a one-time non-cash expense of $171,900 thousand related to a milestone and royalty buyback for the Kv7 platform[8][189] Condensed Consolidated Statements of Cash Flows This section outlines Biohaven's cash flows from operating, investing, and financing activities for the periods ended June 30, 2024 and 2023 | Metric | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | | :------------------------------------------------------------------ | :------------------------------------------- | :------------------------------------------- | | Net cash used in operating activities | (270,435) | (122,031) | | Net cash (used in) provided by investing activities | (63,900) | 75,195 | | Net cash provided by financing activities | 324,546 | 6,329 | | Net decrease in cash, cash equivalents, and restricted cash | (9,802) | (40,654) | | Cash, cash equivalents, and restricted cash at end of period | 242,318 | 201,950 | - Net cash used in operating activities increased significantly, primarily due to higher R&D spending[10][202] - Investing activities shifted from providing cash to using cash, driven by increased purchases of marketable securities[10][203] - Financing activities provided a substantial amount of cash, mainly from common share issuances[10][204] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of Biohaven's accounting policies, financial instrument valuations, and key agreements 1. Nature of the Business and Basis of Presentation This section describes Biohaven's core business as a biopharmaceutical company and the basis for preparing its financial statements - Biohaven Ltd. is a biopharmaceutical company focused on discovery, development, and commercialization of treatments in immunology, neuroscience, and oncology, leveraging proprietary drug development platforms[12] - The company was spun off from Biohaven Pharmaceutical Holding Company Ltd. on October 3, 2022, becoming an independent, publicly traded entity[14][15] - Biohaven expects its existing cash, cash equivalents, and marketable securities to fund operations for at least one year but anticipates needing additional funding through equity, debt, or collaborations to support its growth strategy and ongoing losses[17][18] 2. Summary of Significant Accounting Policies This section outlines Biohaven's key accounting principles, including GAAP compliance, equity-linked instruments, and fair value measurements - The unaudited interim condensed consolidated financial statements are prepared in accordance with GAAP, with significant estimates including research and development expense accruals and valuation of forward contract and derivative liabilities[19][21] - The company classifies equity-linked instruments as liabilities or derivatives based on ASC 480-10 and ASC 815-40, with changes in fair value recorded in other income (expense), net[23][24] - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs), with forward contract liabilities being Level 3 measurements based on Monte Carlo simulations[27][28][29] 3. Marketable Securities This section details Biohaven's marketable securities portfolio, primarily U.S. treasury bills, and related investment income and realized gains/losses | Metric | June 30, 2024 ($ thousands) | December 31, 2023 ($ thousands) | | :------------------------------------ | :-------------------------- | :------------------------------ | | Fair Value of Debt Securities | 234,745 | 167,319 | | - Included in Cash and cash equivalents | 36,944 | 33,902 | | - Included in Marketable securities | 197,801 | 133,417 | | Metric | Three Months Ended June 30, 2024 ($ thousands) | Three Months Ended June 30, 2023 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | | :---------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net investment income | 5,100 | 4,098 | 9,401 | 8,223 | | Proceeds from sales of debt securities | — | 2,464 | — | 4,920 | | Gross realized capital losses | — | 17 | — | 39 | - The company's marketable securities primarily consist of U.S. treasury bills[31] - Net investment income increased for both the three and six months ended June 30, 2024, compared to the prior year, while there were no sales of debt securities or realized capital losses in 2024[36][37] 4. Fair Value of Financial Assets and Liabilities This section categorizes Biohaven's financial assets and liabilities by fair value levels, highlighting Level 3 derivative liabilities from the Knopp Amendment | Balance Sheet Classification | Type of Instrument | Level 1 ($ thousands) | Level 2 ($ thousands) | Level 3 ($ thousands) | Total ($ thousands) | | :---------------------------------------- | :---------------------------------------------------- | :-------------------- | :-------------------- | :-------------------- | :------------------ | | June 30, 2024 Assets: | | | | | | | Cash and cash equivalents | Money market funds | 113,379 | — | — | 113,379 | | Cash and cash equivalents | U.S. treasury bills | — | 36,944 | — | 36,944 | | Marketable securities | U.S. treasury bills | 29,701 | 168,100 | — | 197,801 | | Other non-current assets | Money market funds | 2,515 | — | — | 2,515 | | June 30, 2024 Liabilities: | | | | | | | Forward contract and derivative liabilities | Forward contract, current and written put option, current | — | — | 81,220 | 81,220 | | Derivative liability, non-current | Written put option, non-current | — | — | 12,180 | 12,180 | - The company's financial assets are primarily classified as Level 1 (money market funds) and Level 2 (U.S. treasury bills)[42] - New forward contract and derivative liabilities, totaling $93,400 thousand as of June 30, 2024, are classified as Level 3 due to unobservable inputs from Monte Carlo simulations, reflecting obligations under the Knopp Amendment[42][45][46] | Unobservable Inputs (Level 3) | As of June 30, 2024 | As of May 1, 2024 | | :---------------------------- | :------------------ | :---------------- | | Time to payment (years) | 0.91 | 1.08 | | Volatility (annual) | 70.0% | 80.0% | | Discount rate | 15.6% | 14.8% | 5. Balance Sheet Components This section provides a detailed breakdown of specific balance sheet items, including property and equipment and accrued expenses | Property and Equipment, Net | As of June 30, 2024 ($ thousands) | As of December 31, 2023 ($ thousands) | | :-------------------------- | :-------------------------------- | :------------------------------------ | | Total | 28,597 | 24,916 | | Accumulated depreciation | (10,201) | (8,283) | | Property and equipment, net | 18,665 | 17,191 | | Accrued Expenses and Other Current Liabilities | As of June 30, 2024 ($ thousands) | As of December 31, 2023 ($ thousands) | | :--------------------------------------------- | :-------------------------------- | :------------------------------------ | | Accrued employee compensation and benefits | 10,845 | 837 | | Accrued clinical trial costs | 36,446 | 29,501 | | Total accrued expenses and other current liabilities | 57,728 | 39,846 | - Property and equipment, net, increased by $1,500 thousand, primarily due to additions in building and land, and office and lab equipment[52] - Accrued expenses and other current liabilities rose by $17,900 thousand, driven by significant increases in accrued employee compensation and benefits, and accrued clinical trial costs[50] 6. Shareholders' Equity This section details changes in Biohaven's shareholders' equity, including common share issuances and the impact of net loss | Metric | As of June 30, 2024 ($ thousands) | As of December 31, 2023 ($ thousands) | | :------------------------------------------------------------------ | :-------------------------------- | :------------------------------------ | | Common Shares Amount | 1,298,553 | 887,528 | | Additional Paid-in Capital | 83,832 | 39,804 | | Accumulated Deficit | (998,567) | (499,292) | | Total Shareholders' Equity | 383,740 | 427,975 | - Total shareholders' equity decreased by $44,200 thousand from December 31, 2023, to June 30, 2024, primarily due to a net loss of $499,300 thousand, partially offset by proceeds from common share issuances totaling $317,700 thousand from a public offering and $69,900 thousand from an equity distribution agreement[54][58][61] - The company issued 1,872,874 common shares valued at $66,000 thousand to Knopp in May 2024 as consideration for the Knopp Amendment, and also issued a warrant to purchase 294,195 common shares[57][173][174] 7. Accumulated Other Comprehensive (Loss) Income This section presents changes in Biohaven's accumulated other comprehensive loss/income for the periods ended June 30, 2024 and 2023 | Metric | Three Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | | :------------------------------------------------------------------ | :--------------------------------------------- | :------------------------------------------- | | Total beginning of period accumulated other comprehensive loss | (106) | (65) | | Total other comprehensive income (loss) | 28 | (13) | | Total end of period accumulated other comprehensive loss | (78) | (78) | | Metric | Three Months Ended June 30, 2023 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | | :------------------------------------------------------------------ | :--------------------------------------------- | :------------------------------------------- | | Total beginning of period accumulated other comprehensive income | 166 | 284 | | Total other comprehensive loss | (146) | (264) | | Total end of period accumulated other comprehensive income | 20 | 20 | - Accumulated other comprehensive loss improved from $(106) thousand at the beginning of the three-month period to $(78) thousand at June 30, 2024, primarily due to other comprehensive income of $28 thousand[62] - For the six months ended June 30, 2024, the accumulated other comprehensive loss was $(78) thousand, compared to an income of $20 thousand in the prior year[62][64] 8. Non-Cash Share-Based Compensation This section details Biohaven's non-cash share-based compensation expenses and unrecognized compensation costs for equity awards | Expense Category | Three Months Ended June 30, 2024 ($ thousands) | Three Months Ended June 30, 2023 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | | :---------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Research and development expenses | 7,071 | 2,457 | 28,362 | 4,698 | | General and administrative expenses | 5,161 | 2,238 | 18,747 | 3,762 | | Total non-cash share-based compensation expense | 12,232 | 4,695 | 47,109 | 8,460 | - Total non-cash share-based compensation expense significantly increased to $12,200 thousand for the three months and $47,100 thousand for the six months ended June 30, 2024, compared to the prior year, primarily due to annual equity incentive awards granted in late 2023 and early 2024[65][190][191][198] - As of June 30, 2024, unrecognized compensation cost for unvested share options was $90,200 thousand, expected to be recognized over 2.33 years, and for RSUs was $9,400 thousand, expected over 2.53 years[66][68] 9. Net Loss Per Share This section presents Biohaven's net loss per share calculations, including basic and diluted figures and excluded potential common shares | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | (319,771) | (90,346) | (499,275) | (160,838) | | Weighted average common shares outstanding | 87,766,069 | 68,248,023 | 84,174,099 | 68,227,564 | | Net loss per share — basic and diluted | (3.64) | (1.32) | (5.93) | (2.36) | - Net loss per share significantly increased to $(3.64) for the three months and $(5.93) for the six months ended June 30, 2024, compared to the prior year, reflecting the higher net loss and increased weighted average common shares outstanding[71] | Potential Common Shares Excluded from Diluted EPS | As of June 30, 2024 | As of June 30, 2023 | | :------------------------------------------------ | :------------------ | :------------------ | | Options to purchase common shares | 13,545,016 | 9,639,557 | | Warrants to purchase common shares | 294,195 | — | | Restricted share units | 263,672 | — | | Total | 14,102,883 | 9,639,557 | 10. License, Acquisitions and Other Agreements This section outlines Biohaven's various licensing and acquisition agreements, including potential milestone payments and recent amendments - Biohaven has various license and acquisition agreements with potential future milestone payments totaling approximately $140,700 thousand for development, $642,000 thousand for regulatory approval, and $2,150,000 thousand for commercial milestones[73] - In May 2024, the Knopp Amendment revised the Kv7 platform acquisition terms, reducing potential future milestone payments by $867,500 thousand and replacing scaled royalties with a flat mid-single digit rate[88][172] - Consideration for the Knopp Amendment included issuing 1,872,874 common shares (valued at $66,000 thousand) and a warrant to Knopp[173][174] - The Pyramid acquisition in January 2024 for BHV-1510 involved an upfront payment of 255,794 common shares and potential success-based payments up to $75,000 thousand for developmental, regulatory, and commercial milestones[94][95] 11. Commitments and Contingencies This section details Biohaven's contractual obligations, including lease agreements and research commitments, and potential contingent liabilities - The company entered a new Pittsburgh Centre Avenue Lease in March 2024 for lab space, commencing mid-2025 with a 122-month term and annual commitments ranging from $1,860 thousand to $2,370 thousand[98] - Research commitments with CMOs and CROs had no remaining maximum commitments exceeding one year as of June 30, 2024[99] - The Moda Agreement was amended in August 2023, making Moda eligible for additional development and regulatory milestone payments up to $25,200 thousand and commercial milestone payments up to $23,000 thousand[100][101] 12. Income Taxes This section discusses Biohaven's income tax provision and effective tax rate, including the impact of new IRS guidance and valuation allowances | Metric | Three Months Ended June 30, 2024 ($ thousands) | Three Months Ended June 30, 2023 ($ thousands) | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Income tax provision | 177 | 2,177 | 746 | 3,116 | | Effective income tax rate | 0.1% | 2.5% | 0.1% | 2.0% | - The income tax provision decreased significantly for both the three and six months ended June 30, 2024, primarily due to the adoption of new IRS guidance allowing immediate deduction of certain U.S. R&D expenditures reimbursed by the foreign parent[103] - The company maintains a full valuation allowance against its net deferred tax assets, including R&D tax credit and net operating loss carryforwards, as realization is not considered more likely than not[185] 13. Related Party Transactions This section describes Biohaven's transactions with related parties, including the Former Parent and agreements involving the CEO - The Former Parent ceased to be a related party after the Separation on October 3, 2022[104] - The company recorded no material income from transition services to the Former Parent for the three and six months ended June 30, 2024, a decrease from $1,700 thousand and $5,600 thousand in the prior year periods, respectively[104] - The company's CEO is entitled to a share of glutamate product-related royalty revenues from the Yale Agreement[104] - R&D expenses related to Yale Agreements were $582 thousand and $1,030 thousand for the three and six months ended June 30, 2024, respectively[105] Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Biohaven's financial condition, operational results, clinical milestones, and liquidity Overview This section introduces Biohaven as a biopharmaceutical company, its strategic focus, diverse pipeline, and independent public company status - Biohaven is a biopharmaceutical company focused on discovering, developing, and commercializing treatments in immunology, neuroscience, and oncology, utilizing proprietary drug development platforms[111] - The company's pipeline includes programs for Kv7 ion channel modulation (epilepsy, mood disorders), extracellular protein degradation (immunological diseases), TRPM3 antagonism (migraine, neuropathic pain), TYK2/JAK1 inhibition (neuroinflammatory disorders), glutamate modulation (OCD, SCA), myostatin inhibition (SMA, obesity), and antibody-recruiting bispecific molecules/ADCs (cancer)[111] - Biohaven became an independent, publicly traded company on October 3, 2022, following its spin-off from Biohaven Pharmaceutical Holding Company Ltd[112] Clinical-Stage Milestones This section highlights Biohaven's progress across its clinical pipeline, detailing key developments for various drug candidates and platforms - Troriluzole (Glutamate Modulation) is in Phase 3 trials for OCD and is being evaluated in GBM AGILE for glioblastoma[114][116] - An NDA for SCA3 was refused by the FDA, but a new real-world evidence protocol (BHV4157-206-RWE) is underway with topline data expected in H2 2024[119][120] - Taldefgrobep Alfa (Myostatin Platform) is in a Phase 3 trial for Spinal Muscular Atrophy (SMA), with topline data expected in H2 2024[124] - Taldefgrobep Alfa received Fast Track, Orphan Drug, and Rare Pediatric Disease designations for SMA[125] - A Phase 2 trial for metabolic disease (obesity) is planned for H2 2024 for Taldefgrobep Alfa[129] - BHV-7000 (Kv7 Ion Channel Platform) is advancing into five Phase 3 trials for refractory focal epilepsy and idiopathic generalized epilepsy, and Phase 2 trials for Major Depressive Disorder (MDD) and bipolar disorder, all initiated in Q1/Q2 2024[134][136][140][144] - BHV-2100 (TRPM3 Antagonist) reported positive Phase 1 pharmacokinetic and safety data in May 2024, leading to plans for Phase 2 studies in acute migraine and a proof-of-concept study in neuropathic pain in H2 2024[148] - BHV-8000 (TYK2/JAK1 Inhibitor) showed positive Phase 1 results with CNS target engagement[152] - Phase 2/3 trials are anticipated in H2 2024 for BHV-8000 in neuroinflammatory conditions like Parkinson's disease and ARIA in Alzheimer's disease[153] - MoDE Degraders (BHV-1300, BHV-1310, BHV-1400, BHV-1600) are in various stages of preclinical and Phase 1 development, targeting conditions like rheumatoid arthritis, generalized myasthenia gravis, IgA Nephropathy, and dilated cardiomyopathy, with multiple INDs expected in 2024 and 2025[154][159][161][163][164][165][166] - Oncology Platform includes BHV-1100 (CD-38 ARM™) in a Phase 1a/1b trial for multiple myeloma[167] - BHV-1510 (TROP-2 ADC) commenced a Phase 1/2 trial in Q2 2024 for advanced solid tumors, showing improved preclinical activity and safety[170][171] - BHV-1500 (CD30-directed ADC) IND submission is expected in 2025[172] Recent Developments This section outlines significant recent events impacting Biohaven, particularly the Knopp Amendment and its financial implications - In May 2024, the Knopp Amendment significantly reduced potential future milestone payments by $867,500 thousand and replaced scaled royalties with a flat mid-single digit rate for Kv7 programs[172] - Consideration for the Knopp Amendment included issuing 1,872,874 common shares (valued at $66,000 thousand) and a warrant to Knopp[173][174] Components of Our Results of Operations This section explains the key drivers of Biohaven's financial performance, including R&D, G&A expenses, other income, and income tax provisions - The company has not generated product sales revenue and does not expect to in the near future, relying on successful clinical development and regulatory approval[175] - Research and Development (R&D) expenses are expensed as incurred, including costs for CROs/CMOs, manufacturing, personnel, regulatory compliance, and milestone payments[176][177] - R&D expenses are expected to remain significant due to increased personnel, late-stage clinical trials, and regulatory filings[179] - General and Administrative (G&A) expenses include personnel costs, facilities, and professional services, and are expected to remain significant as the company supports R&D and prepares for potential commercialization as an independent public company[180] - Other income, net, primarily consists of changes in the fair value of forward contract and derivative liabilities (valued using Monte Carlo simulations) and net investment income[181][182][183] - Income tax provisions are primarily for profitable U.S. and Ireland subsidiaries, with a full valuation allowance maintained against net deferred tax assets[185][186] Results of Operations This section provides a comparative analysis of Biohaven's financial results for the three and six months ended June 30, 2024 and 2023 | Metric | Three Months Ended June 30, 2024 ($ thousands) | Three Months Ended June 30, 2023 ($ thousands) | Change ($ thousands) | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :------------------- | | Research and development | 314,819 | 79,490 | 235,329 | | General and administrative | 18,953 | 14,521 | 4,432 | | Total operating expenses | 333,772 | 94,011 | 239,761 | | Net loss | (319,771) | (90,346) | (229,425) | | Other income, net | 14,178 | 5,842 | 8,336 | | Provision for income taxes | 177 | 2,177 | (2,000) | | Metric | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | Change ($ thousands) | | :--------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------- | | Research and development | 470,791 | 142,951 | 327,840 | | General and administrative | 46,221 | 28,842 | 17,379 | | Total operating expenses | 517,012 | 171,793 | 345,219 | | Net loss | (499,275) | (160,838) | (338,437) | | Other income, net | 18,483 | 14,071 | 4,412 | | Provision for income taxes | 746 | 3,116 | (2,370) | - R&D expenses for the three months ended June 30, 2024, increased by $235,300 thousand to $314,800 thousand, largely due to a $171,900 thousand non-cash expense for the Kv7 platform milestone and royalty buyback, and advancing multiple clinical programs[189] - For the six months, R&D increased by $327,800 thousand to $470,800 thousand, including the Kv7 buyback and $22,600 thousand for the Pyramid Acquisition (BHV-1510)[197] - Other income, net, increased by $8,300 thousand for the three months and $4,400 thousand for the six months, primarily due to a $9,200 thousand gain on settlement of the 2024 Additional Consideration forward contract and increased investment income, partially offset by decreased income from the Transition Services Agreement with the Former Parent[192][198][199] Liquidity and Capital Resources This section assesses Biohaven's financial liquidity, capital resources, cash flow activities, and future funding requirements - As of June 30, 2024, Biohaven had $239,100 thousand in cash and cash equivalents and $197,800 thousand in marketable securities[201] - The company expects these resources to fund operations for more than one year[211] | Cash Flow Activity | Six Months Ended June 30, 2024 ($ thousands) | Six Months Ended June 30, 2023 ($ thousands) | Change ($ thousands) | | :---------------------------------------------------------- | :------------------------------------------- | :------------------------------------------- | :------------------- | | Net cash used in operating activities | (270,435) | (122,031) | (148,404) | | Net cash (used in) provided by investing activities | (63,900) | 75,195 | (139,095) | | Net cash provided by financing activities | 324,546 | 6,329 | 318,217 | - Net cash used in operating activities increased by $148,400 thousand, primarily due to higher R&D spending[202] - Net cash used in investing activities increased by $139,100 thousand, driven by increased purchases of marketable securities[203] - Net cash provided by financing activities increased by $318,200 thousand, mainly from a $247,800 thousand public offering and $69,900 thousand from an equity distribution agreement[204][205][206] - The company expects to require additional capital to fund increasing expenses from advancing preclinical and clinical programs, potential commercialization, and acquisitions, planning to raise funds through equity, debt, or strategic alliances[210][211][212][214] Item 3: Quantitative and Qualitative Disclosures About Market Risk This section outlines Biohaven's exposure to market risks, including foreign currency, interest rate, equity price, and credit risk, without hedging activities - Foreign currency translation exposures are currently immaterial, and the company does not engage in hedging activities[220] - Interest rate risk exists for marketable securities; a 1.00% change in interest rates would impact the investment portfolio's fair value by approximately $400 thousand, but is not considered material[221] - No hedging activities are undertaken for interest rate risk[222] - Equity price risk arises from derivative liabilities related to Knopp Amendment true-up payments, where a decrease in the company's 20-day volume weighted average share price (VWAP) relative to the Reference Price would increase the fair value of these liabilities[223][224] - Credit risk is managed by investing excess cash in highly rated financial institutions and investment-grade debt instruments, with restrictions on credit ratings, maturities, and concentrations[225] - No credit losses or allowances for credit losses have been experienced[225] Item 4: Controls and Procedures This section details the evaluation of Biohaven's disclosure controls and internal controls over financial reporting, concluding effectiveness with no material changes - As of June 30, 2024, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level[228] - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2024[228] Part II Other Information This section provides additional information on Biohaven's legal proceedings, risk factors, equity sales, other disclosures, and exhibits Item 1: Legal Proceedings Biohaven is not currently involved in any material legal proceedings that would significantly impact its business, operating results, or financial condition - The company is not currently involved in any material legal proceedings and is unaware of any pending or threatened legal actions that could have a material adverse effect on its financial condition or operations[229] Item 1A: Risk Factors Biohaven's risk factors have not materially changed from those described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023 - No material changes to the company's risk factors have occurred since the Annual Report on Form 10-K for the fiscal year ended December 31, 2023[230] Item 2: Unregistered Sales of Equity Securities and Use of Proceeds This section details Biohaven's unregistered sales of equity securities, including common shares issued for the Pyramid acquisition and Knopp Amendment - In January 2024, Biohaven issued 255,794 common shares (253,410 issued by June 30, 2024) as an upfront payment for the Pyramid acquisition, and an additional 98,129 common shares (97,233 issued by June 30, 2024) for a developmental milestone[230] - In May 2024, in connection with the Knopp Amendment, the company issued 1,872,874 common shares (valued at approximately $75,000 thousand) as 2024 Additional Consideration and a warrant to purchase 294,195 common shares[232] - All these issuances were unregistered under the Securities Act, relying on the private offering exemption under Section 4(a)(2)[230][233] Item 5. Other Information This section states that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2024 - No directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2024[234] Item 6: Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including amendments to agreements, warrants, certifications, and iXBRL financial data - Exhibits include the Amendment to Membership Interest Purchase Agreement with Knopp, the Warrant issued to Knopp, Section 302 and 906 certifications, and iXBRL formatted financial statements[235] Signatures This section contains the official signatures of Biohaven Ltd.'s Chief Executive Officer and Chief Financial Officer, certifying the report pursuant to the Securities Exchange Act of 1934 - The report is duly signed by Vlad Coric, M.D., Chief Executive Officer, and Matthew Buten, Chief Financial Officer, on behalf of Biohaven Ltd. on August 9, 2024[237]